The cost of gas, food, and a wide range of goods and services went up in May, pushing inflation to a new four-decade high, leaving American consumers no choice but to pay for the rising cost.
According to a report, the Labor Department said that consumer prices jumped 8.65 last month, up from the previous year, which was faster than April’s year-over-year increase of 8.3%.
The new inflation figure, the highest since 1981, will increase the pressure upon the Federal Reserve to raise interest rates aggressively.
On a month-to-month basis, prices increased by 1% from April to May, much faster than the 0.3% increase from March to April.
The higher costs in everything contributed to that surge, from airline tickets to restaurant meals to new and used cars.
These price spikes also raised what’s known as “core” inflation, a measure that excludes volatile prices for energy and food.
Core prices were up 0.6% in May for a second consecutive month. They’re currently 6% higher than they were one year ago.
“Virtually every sector has higher-than-normal inflation,” said Ethan Harris, head of global economic research at Bank of America. “It’s made its way into every nook and cranny of the economy. That’s the thing that makes it concerning because it means it’s likely to persist.”
The food price rose almost 12% last month from the previous year, the highest rise since 1979.
The rising cost of grain and fertilizer following the conflict between Russia and Ukraine is accelerating the increase. Restaurant prices jumped 7.4% over the last year, the largest 12-month gain since 1981, reflecting higher costs for food and workers.
Employers are under tremendous pressure to raise wages in a job market that is still robust with low unemployment, few layoffs, and near-record job openings.
While average wages are growing at the fastest rate in decades, they’re not growing fast enough for many workers to keep up with inflation.
Small businesses are struggling to meet increasing costs for supplies and labor, indicating that price hikes will continue.
Andrew McDowell, the founder of With Love Market & Cafe in Los Angeles, said he’s paying more for food supplies, workers, and reusable bags, which used to cost him 23 cents but now cost 45 cents.
The company’s chicken BLT now costs 20% more than before the pandemic. McDowell said he’s grappling with the highest prices for supplies and workers he’s ever faced. He thinks he may have to raise prices again by 10% to 20%.
“Every product is impacted, every aspect of the business is affected,” McDowell said.
This story originally appeared on AP News.
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